Question

The account balances for a company are listed below. All balances are as of Dec. 31,...

The account balances for a company are listed below. All balances are as of Dec. 31, 2017, except where noted otherwise   

Accounts Payable $7,200 Rent Expense $2,100
Accounts Receivable 8,400 Equipment 74,500
Salaries Payable 5,600 Furniture 16,600
Notes Payable (due 12/31/19) 20,900 Depreciation Expense 4,000
Dividends 3,000 Accumulated Depreciation 10,000
Sales Revenue 139,500 Cash 14,000
Notes Payable (due 4/30/18) 2,500 Common Stock ???
Cost of Goods Sold 60,900 Trademark 8,000
Loss of Sale of Equipment 4,500 Retained Earnings (1/1/17) 56,200
Inventory 19,800 Marketable Equity Securities 300
Interest Expense 9,750 Gain on Sale of Building 2,450
Salary Expense 30,450 Prepaid Insurance Expense 500
Unearned Revenue 3,800 Copyright 6,000

Determine the common stock balance as of Dec. 31, 2017:  

A.

$20,650

B.

$14,650

C.

$2,850

D.

$11,350

E.

$17,150

A.

$41,550

B.

$42,050

C.

$36,050

D.

$30,250

E.

$32,300

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Answer #1

Answer

  • The said problem of finding Common Stock balance can be solved as below.
  • We know that accounts have Debit or Credit balances.
  • We can arrange the account balance in form of Trial Balance.
  • The Trial Balance’s Debit and Credit side must be equal.
  • Hence, any difference between Debit and Credit total would be the value of common stock.
  • How to classify accounts balances to Debit and Credit column?

Normal Debit Balance

Normal Credit Balance

Asset

Liabilities

Contra Liability

Equity

Expenses

Contra Asset

Loss

Revenues

Contra Equity

Gains

  • Working: Trial Balance and Answer

Classification

Accounts

Debit

Credit

Asset

Accounts Receivable

$8,400

Asset

Inventory

$19,800

Asset

Equipment

$74,500

Asset

Furniture

$16,600

Asset

Cash

$14,000

Asset

Trademark

$8,000

Asset

Marketable Equity Securities

$300

Asset

Prepaid Insurance Expense

$500

Asset

Copyright

$6,000

Contra Asset

Accumulated Depreciation

$10,000

Contra Equity

Dividends

$3,000

Equity

Retained Earnings (1/1/17)

$56,200

Expense

Cost of Goods Sold

$60,900

Expense

Interest Expense

$9,750

Expense

Salary Expense

$30,450

Expense

Rent Expense

$2,100

Expense

Depreciation Expense

$4,000

Gain

Gain on Sale of Building

$2,450

Liability

Accounts Payable

$7,200

Liability

Salaries Payable

$5,600

Liability

Notes Payable (due 12/31/19)

$20,900

Liability

Notes Payable (due 4/30/18)

$2,500

Liability

Unearned Revenue

$3,800

Loss

Loss of Sale of Equipment

$4,500

Revenue

Sales Revenue

$139,500

TOTAL

$262,800

$248,150

Difference = Common Stock

$14,650

  • Correct Answer:
    Common Stock balance at 31 Dec 2017 = $ 14,650 = Option ‘B’
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